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Registration of Mutual Fund with SEBI

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  • Formation of Mutual fund company
  • Review of Documents with the directors of the company
  • Business plan for 5 years
  • Mutual fund product plan & Risk assessment
  • Advisory on Application before the SEBI Board
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What is Registration of Mutual Fund with SEBI?

  • A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders.
  • Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.
  • An applicant proposing to sponsor a mutual fund (MF) in India must submit an application in Form A [first schedule of the SEBI (Mutual Funds) Regulations, 1996 (hereinafter, referred to as the Regulations)] along with a non-refundable fee of INR 5 lakh.
  • The application is examined and once the sponsor satisfies the eligibility criteria, it is required to complete the remaining formalities for setting up a MF. These include inter alia, executing the trust deed and investment management agreement, setting up a trustee company/board of trustees comprising two-thirds independent trustees, incorporating the asset management company (AMC), contributing to at least 40% of the net worth of the AMC and appointing a custodian. Upon satisfying these conditions, the registration certificate is issued subject to the payment of registration fees of INR 25 lakh.

Procedure for Mutual Funds Registered with SEBI

An application for mutual funds registered with sebi shall be made to the Board (SEBI) in Form Aby the sponsor along with the non-refundable fee of INR 5 lakh.

Eligibility criteria

The applicant has to fulfil the following criteria for grant of a certificate of registration in the process:

The sponsor should have a sound track record and general reputation of fairness andintegrity in all his business transactions.

Explanation: For the purposes of this clause "sound track record" shall mean thesponsor should

  • Be carrying on business in financial services for a period of not less than 5 years; and
  • The net worth is positive in all the immediately preceding 5 years; and
  • The net worth in the immediately preceding year is more than the capitalcontribution of the sponsor in the asset management company; and
  • The sponsor has profits after providing for depreciation, interest and tax in 3 out of the immediately preceding 5 years, including the 5 year.
  • The applicant is a fit and proper person.

In the case of an existing mutual fund, such fund is in the form of a trust and thetrust deed has been approved by the SEBI;

The sponsor has contributed or contributes at least 40% to the net worth of the asset management company,

Provided that any person who holds 40% or more of the net worth of an assetmanagement company shall be deemed to be a sponsor and will be required to fulfil the eligibility criteria specified in these regulations;

  • The sponsor or any of its directors or the principle officer to be employed by the mutual fund should not have been guilty of fraud or has not been convicted of an offence involving moral turpitude or has not been found guilty of any economic offence;
  • Appointment of trustees to act as trustees for the mutual fund in accordance with the provisions of the regulations;
  • Appointment of Asset Management Company to manage the mutual fund and operate the scheme of such funds in accordance with the provisions of these regulations;
  • Appointment of custodian in order to keep custody of the securities or gold and gold related instrument or other assets of the mutual fund held in terms of these regulations, and provide such other custodial services as may be authorised by the trustees

SEBI may register the mutual fund on receipt of all the information and accordingly decide to grant acertificate of registration in Form B subject to the payment of registration fees of INR 25 lakh.

A mutual fund shall pay before the 15th April each year an annual fee as specified under for every financial year from the year following the year of registration

Average Assets under Management (AAUM) as on 31 March Annual Fee
AAUM up to INR 10,000 crore 0.0015% of the AAUM
Part of AAUM above INR 10, 000 crore 0.0010% of the portion of AAUM in excess of INR 10,000 crore

Subject to a minimum of INR 2, 50,000 and a Maximum of INR 1, 00, 00,000.

Where the sponsor does not satisfy the eligibility criteria SEBI may reject the application and inform the applicant of the same.

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